BlackRock ups India’s sovereign risk ranking

The Indian economy has experienced a “wave of optimism” following the election of Prime Minister Narendra Modi in 2014 which has also seen it improve its sovereign risk ranking.

BlackRock has released the rankings of its 2014 BlackRock Sovereign Risk Index (BSRI) which draws on a pool of financial data, surveys and political insights to provide investors with a framework of tracking a country’s sovereign credit risk.

Of the 50 countries BlackRock has ranked within its index, India has been reported as the “star performer” of emerging markets rising six places to 36, placing it ahead of countries Spain and Ireland.

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“Reformist Prime Minister Narendra Modi and Reserve Bank of India chief Raghuram Rajan have sparked a wave of optimism on the Indian economy,” a report from BlackRock said.

“Business confidence and growth are on an upswing, inflation is receding – and the currency has stabilised.

“India’s Fiscal Space score registered strong gains as its projected budget deficit fell,” it said. Forecasts of the country’s 12-month forward budget deficit have fallen to 4.3 per cent of GDP, from 5.2 per cent a year ago, according to Consensus Economics.

BlackRock also reported China fell six places within its index, falling from 19 to 25 due to a decline it its ‘fiscal space’ score.

“The IMF added local government debts to its estimates of China’s total liabilities for the first time, leading to a sharp increase in its debt-to-GDP projections,” the report said.

“China’s gross debt is now expected to reach 45 per cent of GDP by late in the decade, versus the earlier estimate of less than 15 per cent.

“This would still leave China’s gross debt-to-GDP ratio well below the current level of nations such as the US (105 per cent), Japan (245 per cent) and UK (92 per cent), according to IMF data,” it said.